The Following Problem Requires Present Value Information

question 42

Essay

The following problem requires present value information:
Biotech sold a patent on a new blood analyzer to Pharma.The sales agreement which was signed on January 1,2009 requires Pharma to pay Biotech $1 million immediately.In addition,Pharma is required to pay $600,000 each December 31 for 20 years starting with December 31,2009.Pharma and Biotech judge that a 10 percent is an appropriate interest rate for this arrangement.
a.Compute the present value of the receivable on Biotech's books on January 1,2009 immediately after receiving the $1 million down payment.
b.Compute the present value of the receivable on Biotech's books on December 31,2009.
c.Compute the present value of the receivable on Biotech's books on December 31,2010.

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Definitions:

Contemporary Dating

Modern forms of finding romantic partners, often characterized by the use of technology, liberal attitudes towards relationships, and diverse dating practices.

Filter Theory

A theory that suggests individuals use a series of filters, such as socio-economic status or religion, to narrow down potential partners in the dating process.

Social Exchange Theory

A theoretical framework that posits social relationships are based on the exchange of resources, with the goal of maximizing benefits and minimizing costs.

Mate Selection

The process through which individuals choose partners with whom they form romantic or sexual relationships, often influenced by societal norms, personal preferences, and psychological factors.